E-Financial
LAPO Navigates Microfinance through COVID-19
By Edward P. Eze
Microfinance Institutions (MFIs) provide the best access to banking services for the majority of such underprivileged populations whose livelihoods have been worst affected by the pandemic’s disruptions to transportation, customer service, supply etc.
Because these populations generally save little and rely on daily basic income, they are now in greater need of sustainable credit and other pro-poor services that were already provided for them by microfinance institutions before the pandemic hit.
For a country like Nigeria experiencing mass poverty, steep unemployment and other serious socio-economic challenges, the implications are dire.
It means that millions of poor citizens amongst the 40 percent of the population will find it difficult to get back on their feet without the sort of services and support that MFIs provide. It goes without saying that the effectiveness of Nigeria’s MFIs will be critical to rebuilding the economy.
One of the major players in Nigeria’s Microfinance sector is LAPO Microfinance Bank which has an extensive network of branches across the country and accounts for over 27 percent of the Microfinance (MFB) sector.
LAPO MFB’s ubiquitous presence across the country as well as its pro-poor and solid corporate reputation established over nearly four decades have made it the country’s preeminent MFB.
In fact, due to its popularity many Nigerians in the lower socio-economic groups use ‘LAPO’ as a generic name for all microfinance banks, the same way “Omo” has become a synonym for detergents and “Bournvita” used to be for cocoa beverages.
LAPO MFB has approached the challenges of the pandemic with its trademark rigour and thoroughness.
It has made significant strides amidst the historic disruptions brought on by the pandemic whiche emerged in the country just over a year ago.
It has sustained its support to low-income earners, even recording a total disbursement of N12.2 billion as loans to 152,446 rural farmers and owners of Small and Medium Scale Enterprises (SMEs) in 2020.
Announcing these milestones recently, Dr Honestus Obadiora, LAPO’s Acting Executive Director, said the loans were disbursed in 253 branches across 21 states. “We were able to achieve this in spite of the pandemic and we are committed to sustaining this financial support through our development plan to open more branches and reach more clients,” Obadiora said.
The N12.2 billion disbursement represents a 12 percent increase compared to N10.9 billion disbursed in 2019 with portfolio at risk standing at 18.62 percent.
LAPO MFB has recorded other notable achievements during the pandemic including the launch in February, 2020 of its second bond, a N6 billion fixed rate bond which within five months was already oversubscribed by N200m.
However, even with such stellar achievements, LAPO like other MFIs is weathering significant challenges due to the pandemic.
A survey by the Consultative Group to Assist the Poor (CGAP), a global partnership of more than 30 leading development organizations that works to advance the lives of poor people through financial inclusion, shows that microfinance institutions (MFIs) are dealing with rising ‘bad debts,’ which now account for up to 30% of their total loans.
The survey, conducted with the SME Forum, also shows that there is now a higher rate of defaults in loan repayments because of widespread business failures and even outright closures due to the pandemic.
This is a major issue because most MFIs operate with little savings, expecting that small loans will be repaid in a timely fashion and with a low default rate. The fallout of increasing defaults due to the pandemic is that MFIs in turn face challenges repaying banks and their investors.
As a result, the network of trust that is so vital to MFIs is threatened as investors are becoming more cautious about which MFIs they lend money to.
However, reports say majority of MFIs remain reasonably sound financially and widespread bankruptcies are not expected at this time. In the case of LAPO, positive developments such as the enthusiastic response to the recent launch of its bond signal bright prospects for its long-term health.
It is also noteworthy that the pandemic disrupted business operations of many MFIs considerably.
Like its counterparts, LAPO has had to alter physical and onsite operations especially at the start of the pandemic.
The bank demonstrated commendable foresight by closing down its on-site operations across Nigeria on Wednesday, March 25, 2020, ahead of the Government’s lockdown directives for Lagos, Ogun and the Federal Capital Territory.
proactive measure to ensure the safety of customers and staff is in line with LAPO’s well-known reputation for championing public health through investment and public enlightenment.
Interestingly, in a seeming foreshadowing of the pandemic a few months before it began, LAPO played an active role in promoting hygiene through hand washing on World Hand-washing Day, October 15, 2019.
The organization donated items to schools to create awareness about the importance of hand-washing which would turn out to be essential in the fight against Covid-19.
While the pandemic persists, MFIs continue to face challenges meeting physically, communicating, and collecting loan repayments from their clients. International industry experts believe that now more than ever, the value of digital financial channels such as agent networks, e-wallets and mobile banking are vital because these technologies allow for continuity of service and spare customers the risk and inconvenience of travelling to branches as well as protect staff of the MFIs.
LAPO is in a good position to embrace such recommendations to further digitize operations because of its already existing culture of technological innovation.
For instance, in February 2020, LAPO announced plans to implement Oracle’s Flexcube, a budding automated banking software that already powers more than 10 percent of the world’s consumer bank accounts.
The preeminent microfinance bank appreciates that effective digitization must take into account the reality that majority of customers don’t have reliable access to technology.
This is a key component of the conscientiousness required as MFIs navigate the realities of the pandemic and continue to support the poorest segments of the population.
Finally, robust policy support by government is required to assist MFIs maintain asset quality so that they can continue to give out new loans to low-income households or MSMEs as an empowerment and poverty fighting measure.
It is therefore critical for policy makers to make necessary adjustment to extant laws and regulations to achieve this vital objective in order to stave off deepening inequality and poverty to give those at the bottom of the ladder a life line at this very challenging time for the local and global economies.
*Eze is a policy analyst based in Lagos.
West Africa is fast emerging as a global epicentre for virtual asset adoption, propelled by a young, tech-savvy population and macroeconomic instability, according to Dr. Emomotimi Agama, director-general, Securities and Exchange Commission (SEC) Nigeria.
Dr. Emomotimi Agama, DG, SEC
Speaking at the West Africa Compliance Summit organised by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) in Praia, Cape Verde, Dr. Agama warned that while the region’s embrace of digital currencies is accelerating, the absence of coordinated regulation leaves it vulnerable to financial crimes and illicit capital flows.
“With over 60 percent of West Africa’s population under the age of 25 and mobile-first fintech platforms thriving, the region has become a global hotspot for virtual asset adoption,” he said. “But we must act decisively. Regulation is not optional, it is an imperative.”
The summit, themed “Adapting and Thriving in a Complex and Evolving Compliance Landscape,” brought together financial regulators, compliance professionals, and security experts to explore the challenges posed by the rapid rise of virtual assets and decentralised finance (DeFi).
Dr. Agama disclosed that crypto transactions in Nigeria alone surpassed $56 billion in 2024, with citizens increasingly turning to stablecoins such as USDT and USDC to hedge against volatile local currencies.
He highlighted the growing trend of “crypto-dollarisation,” noting that young professionals now demand salaries in stablecoins, while businesses are adopting platforms like Binance Pay for cross-border transactions.
“The naira’s depreciation, Ghana’s cedi weakness, and persistent forex shortages have fueled this shift,” he explained.
“Traditional remittance channels charge up to 10 percent in fees, while cryptocurrencies offer faster and cheaper alternatives. Over $20 billion in remittances flowed into West Africa last year through crypto channels.”
However, he also cautioned that the same innovations driving financial efficiency are increasingly being exploited by fraudsters and criminal actors.
He cited GIABA’s report of $2.1 billion in suspicious crypto-related transactions across West Africa in 2024 alone, including the use of privacy coins by terror financiers to evade detection.
“Unregulated exchanges, artificial market crashes, DeFi ‘rug pulls,’ and Ponzi schemes have wiped out billions in investor funds,” he said. “The recent collapse of the CBEX Ponzi platform is just one of many such incidents. Strong regulation and regional coordination are the only path forward.”
Dr. Agama pointed to Nigeria’s recent legislative progress, especially the enactment of the Investment and Securities Act 2025, which formally classifies virtual assets—including cryptocurrencies, stablecoins, utility tokens, and NFTs—as securities under Section 355(4) and Part I of the Second Schedule.
“Under the new law, all exchanges, wallets, and DeFi platforms must be licensed by the SEC,” he stated.
“We’ve also established a Fintech and Innovation Department to facilitate ongoing dialogue with industry stakeholders and adapt our regulations to emerging realities.”
He called on West African governments to harmonise regulatory frameworks and strengthen intelligence-sharing, proposing a Unified Virtual Asset Service Provider (VASP) Licensing System under the ECOWAS framework.
“A crypto trader banned in Nigeria should not find safe haven in Ghana,” he asserted.
“Financial crime knows no borders. Our collective future depends on our ability to secure this emerging financial frontier.”
Banks in the country have begun suspending instant transaction alerts for cheques drawn from other banks until such cheques are fully cleared.
This is in compliance with a recent directive from the Central Bank of Nigeria (CBN).
This new policy affects customers who receive cheques from other banks, signaling a major change in how cheque payments are confirmed.
According to the CBN directive, the move is intended to prevent confusion around the status of cheque payments and to curb premature release of goods and services before the actual receipt of funds.
In an email sent to its customers, Access Bank stated that moving forward, alerts for cheques deposited into accounts will only be sent after the cheque has been completely processed.
This is to notify you of the recent directive by the CBN which requires banks to send transaction alerts on payments of other bank cheque only upon cheque clearance.
This means that you would only receive alerts for other banks’ cheques paid into your account after the cheque has been fully processed, that is, after the funds are paid into your account or if the cheque is unpaid and and returned from the other bank.
As a result of this new directive, you will no longer receive alerts for cheques lodged into your account until the cheque is cleared or returned”, the bank stated.
Access Bank also advised customers to monitor their accounts through other available channels such as the AccessMore app, internet banking platforms, PrimusPlus, and the USSD service *901# to stay updated on the status of their cheque deposits.
To track your transactions and ensure you do not part with your goods and services prior to payment. Please use our other channels; Accessmore, Internet banking, PrimusPlus, *901#.
We remain committed to delivering seamless and secure banking services to you always”, it said.
The CBN’s directive is designed to protect both payees and payers by ensuring that goods or services are not exchanged before the actual payment has been confirmed.
Previously, customers often received immediate alerts once a cheque was lodged, leading to confusion when the cheque was later dishonoured.
A banking industry insider commented, “This change is critical in promoting financial discipline. It safeguards businesses from losses due to bounced cheques and helps maintain the integrity of cheque payments.”
While digital payment methods are on the rise in Nigeria, cheques still remain a significant payment instrument in various sectors, particularly in wholesale trade and business-to-business transactions.
The apex bank’s new guideline is expected to strengthen trust in cheque transactions by ensuring that payment confirmations are accurate and timely.
As the financial ecosystem evolves, this move is one among several measures aimed at enhancing the safety and reliability of banking transactions across Nigeria.
Credit: Daily Sun
Sterling Financial Holdings Company Plc (“Sterling HoldCo”) has reported a remarkable 157% year-on-year growth in profit-after-tax, hitting ₦41.78 billion for the half-year ended June 30, 2025. This jump from ₦16.26 billion in H1 2024 reflects the Group’s strategic excellence and operational resilience.
Yemi Odubiyi
Profit after tax rose to ₦41.78 billion, while earnings per share climbed to 89 Kobo from 56 Kobo in the prior period. Gross earnings increased by 39.7%, reaching ₦212.61 billion. Interest income grew by 38.3% to ₦167.16 billion, and non-interest income surged 45% to ₦45.45 billion.
The Group’s cost-to-income ratio also improved significantly, declining from 75.7% to 64.5%, thanks to focused cost optimisation.
Sterling HoldCo’s total assets increased to ₦4.08 trillion as of June 2025, up 15.3% from ₦3.54 trillion in December 2024. Shareholders’ funds rose by 22.9% during the period, driven by strong retained earnings and successful recapitalisation. Asset quality also improved, with the non-performing loan ratio down to 5.1% from 5.4%.
Building on its financial strength, the Group completed a ₦100 billion private placement and rights issue, which enabled the recapitalisation of Alternative Bank and bolstered Sterling Bank’s capital base. A public offer to raise an additional ₦53 billion is set to launch in the coming weeks, forming the first phase of a US$400 million capital programme approved at the Group’s Annual General Meeting on June 30, 2025.
Group CEO Yemi Odubiyi attributed the half-year performance to strategic clarity and operational agility, noting that the results reflect resilience and value creation in a dynamic macroeconomic environment.
He reiterated the Group’s commitment to responsible growth, sustainable impact, and continued investment in Nigeria’s growth sectors, including renewable energy, healthcare, and community development.
Sterling HoldCo remains focused on leveraging its robust capital strategy to fuel long-term expansion, innovate across its financial services, and deepen its contribution to Nigeria’s economic progress.
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